What role does the Reserve Bank of India (RBI) play in agricultural financing?
Practice Questions
1 question
Q1
What role does the Reserve Bank of India (RBI) play in agricultural financing?
Directly providing loans to farmers
Regulating interest rates for agricultural loans
Setting crop prices
Controlling irrigation policies
The RBI regulates interest rates for agricultural loans, influencing the cost of borrowing for farmers and thereby impacting agricultural investment.
Questions & Step-by-step Solutions
1 item
Q
Q: What role does the Reserve Bank of India (RBI) play in agricultural financing?
Solution: The RBI regulates interest rates for agricultural loans, influencing the cost of borrowing for farmers and thereby impacting agricultural investment.
Steps: 7
Step 1: Understand that the Reserve Bank of India (RBI) is the central bank of India.
Step 2: Know that the RBI sets rules and regulations for banks in India.
Step 3: Recognize that one of the areas RBI regulates is agricultural loans.
Step 4: Learn that the RBI influences interest rates for these loans.
Step 5: Realize that lower interest rates make it cheaper for farmers to borrow money.
Step 6: Understand that when borrowing is cheaper, farmers are more likely to invest in their farms.
Step 7: Conclude that the RBI's role in regulating interest rates helps support agricultural investment.
